FDI Showcased a Minuscule Increase During April-December 2017

SMEStreet brings a first level analysis on the reasons of this marginal FDI growth, a report.

While India is getting considered and positioned as a sunrise spot for investors, the previous years seems to be nothing much exciting for the FDI investors. Foreign direct investment (FDI) in India grew only by a marginal 0.27 percent to USD 35.94 billion during the first 9 months of the current fiscal, according to the DIPP data.

The FDI inflows were USD 35.84 billion during the April-December period of last fiscal, 2016-17. However, country’s vast number of MSMEs are the major beneficiaries of  this data. But the plain graph of the first nine months also indicates that MSMEs have also nothing much to talk about as far as growth concern.

In rupee terms, however, the FDI recorded a negative growth -- inflows dipped by 4 percent to Rs 231,457 crore, as per the data of Department of Industrial Policy and Promotion.

Well, as per the initial comments from the experts, this data seems to be a result of some of the groundbreaking initiatives that the Government of India has taken. GST implementation is certainly one of the reasons for investors to take on the mode of wait and watch for India. Moreover, demonetization was also a factor which affected a lot of disruption in the initial phase of these nine months.

The major sectors which attracted overseas inflows during the period include services (USD 4.62 billion), telecommunications (USD 6.13 billion), computer software and hardware (USD 5.15 billion) and construction activities (USD 2.5 billion).

Bulk of the FDI came in from Singapore, Mauritius, the Netherlands and Japan.

In the nine months period of the current financial year, India received a maximum of USD 13.34 investments from Mauritius. It was followed by Singapore (9.21 billion) and Netherlands (USD 2.38 billion).

Foreign investments are considered crucial for India, which needs around USD 1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth.

A strong inflow of foreign investments will help improve the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the US dollar.

The DIPP is under the commerce and industry ministry which deals with FDI related issues.